US Equity Performance Declines in October

November 2, 2005 ( - The average US stock fund slipped 2.21% in October, in spite of third quarter GDP data that was better than expected.

All style categories of domestic stock funds slipped in the month, according to a Standard & Poor’s press release.   Small-cap portfolios, on average, slipped 3.08%, while mid-cap (-2.89%) and large-cap (-1.61%) portfolios suffered more narrow losses.   For the year, small-cap (1.74%), mid-cap (3.53%), and large-cap (1.61%) funds contributed to an average domestic equity fund gain of 1.99%.

S&P said investors face concerns for the coming months since energy prices remain high and the nomination of White House economist Benjamin Bernanke as successor to Fed Chairman Alan Greenspan virtually guarantees that interest rates will continue to rise as the Fed seeks to reduce the effect of inflation. 

US Corporate earnings continue to be good.   A new record of fourteen consecutive quarters of year-over-year double-digit growth was established as operating earnings posted by companies in the S&P 500 have gained about 14%.   The S&P expects this record to be extended by two more quarters, before profits begin to decline.